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M/s. Marg Limited v. Sushil Lalwani and Ors.

Civil Appeal · 2026 INSC 402Decided 21 Apr 2026
C.A. No.-004655-004655 - 2026
Justice Pamidighantam Sri Narasimha · Justice Alok Aradhe

Background

The appellant, a real estate developer, had mortgaged a commercial property in Chennai to a bank to secure loans, and after defaulting, negotiated a settlement in which the respondents agreed to pay off the bank and purchase the property through a Memorandum of Agreement (MoA) and eight registered sale deeds. The appellant later sued the respondents for mandatory injunction to enforce the MoA and recover an alleged balance of about Rs. 53 crores, claiming the respondents had not fulfilled all their obligations. The trial court refused to reject the plaint at the threshold, but the Madras High Court, in revision, allowed the respondents' challenge and rejected the plaint under Order VII Rule 11 CPC, citing undervaluation of the suit and lack of a valid cause of action.

Decision Breakdown

The Supreme Court held that the plaint disclosed a complete and intelligible cause of action based on the MoA, its partial implementation through sale deeds, and the alleged breach of reciprocal obligations, so it was not liable to be rejected as disclosing no cause of action. On the valuation issue, the Court held that Order VII Rule 11(b) and (c) CPC require a two-step process: the court must first form an opinion that the valuation or court fee is deficient, and must then give the plaintiff an opportunity to correct it within a fixed time: rejection can follow only if the plaintiff fails to comply. Since the High Court merely concluded the suit was undervalued without determining proper valuation and without granting any opportunity to cure the defect, its order was legally unsustainable. The Supreme Court set aside the High Court's rejection of the plaint and directed the trial court to give the appellant an opportunity to correct the valuation and pay the requisite court fee.

Lesson Learnt

A civil suit cannot be thrown out at the threshold merely because of an undervalued claim or insufficient court fee. The law requires the court to first specify the correct valuation and give the plaintiff a chance to fix the deficiency; only a failure to comply with that opportunity can justify rejecting the plaint.

Official source (sci.gov.in)View Judgment (PDF)

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